Commentary on Political Economy

Sunday, 23 October 2011

Comment on Wulfgang Munchau FT Column

Excellent summary of what is a nefarious crisis. My crucial disagreement with Munchau is when he insists calling this a "political" crisis - implying thereby that it is not "economic". As we are seeking to show through a series of studies at www.eforum21.com, there is a "political" crisis because the European industrial and financial elites (and this extends to the inter-capitalist rivalries between the US, on one side, and China and Germany on the other) have prevailed over the European political leaderships to prevent the reaching of precisely the kind of broad "political resolution" of the crisis that Munchau is seeking!In other words, this crisis is as "economic" as can be, in the sense that European national bourgeoisies are divided as to who should shoulder the burden of adjustment. The fact that no "political" solution is available is only a reflex of the dependence of the superficially "political" on that much more important aspect of capitalist society called, appropriately, "political economy".

The essential point to grasp here is this: the "private" capitalist sector ran out of steam in terms of "profitability" when the huge accumulation of value it derived from the exploitation of hundreds of millions of workers under the iron rule of the Chinese dictatorship could not be "absorbed" or "be profitably re-invested" in the Western capitalist core countries - with a consequent wave of speculation in the Great Moderation that ended up in the Lehman Brothers bust. At that time, the "public" capitalist - the States - had to intervene to rescue financially the "private" capitalists, at the cost of seeing their "public debt" balloon to a size greater than the moon.

The consequence of this is that we have, on one side, "public" treasuries indebted to eternity and having to wring blood out of their own hapless "democratic" electorates. But on the other side we have "private capitalists" sitting on enormous vast quantities of social resources in the form of "capital waiting on the sidelines" in US treasuries and plain old "cash"! The only solution, of course, would be and will have to be the re-nationalisation of the financial sector. Unless, of course, we wish to see hordes of people in the streets with cries of "Ecrasez le rentier!" This time, Keynes would not deplore the "auri sacra fames": instead, he would point a finger at the squabbling capitalists hiding in the corner: the "rentier" capitalists!